New York: Bitcoin and companies tied to cryptocurrencies extended a nearly two-month swoon Monday, tracking with a broader market sell-off in technology companies that many see as overvalued. Bitcoin, which soared to a record USD 126,210.50 on October 6 according to crypto trading platform Coinbase, slid 11.8 per cent to below USD 85,000. That’s a decline of about 33 per cent in just eight weeks.
Stocks across the crypto industry tumbled, with Coinbase Global sinking 5.1 per cent and online trading platform Robinhood Markets losing 5.2 per cent. Bitcoin mining company Riot Platforms dropped 5.4 per cent. Strategy, the biggest of the so-called crypto treasury companies that raises money just to buy bitcoin, tumbled 10.3 per cent. The company has reported holding 649,870 bitcoin. As of 11 am ET Monday they were worth about USD 55 billion.
Other Trump-related crypto ventures have seen declines as well. The market value for the World Liberty Financial token, or $WLFI, has fallen to about USD 3.91 billion from above USD 6 billion in mid-September, according to coinmarketcap.com And the price of a meme coin named for President Donald Trump, $TRUMP, is USD 5.63 compared to around USD 45 just before his inauguration in January.
Analysts point to a number of factors that have led to the sell-off in bitcoin and other crypto investments, including a broad risk-off sentiment that has gripped markets this fall, sending investors toward safer havens such as bonds and gold. Bitcoin futures are down nearly 24 per cent in the past month. At the same time, gold futures are up almost 7 per cent.
In a research note to clients last week, Deutsche Bank analysts also attributed the recent declines in crypto to institutional selling, other long-term holders collecting profits and a more hawkish Federal Reserve. Stalled crypto regulation has also contributed to the uncertainty, Deutsche Bank said.
“While volatility remains inherent, these conditions indicate Bitcoin’s portfolio integration is being tested, and raises questions of whether this is a temporary correction or a more prolonged adjustment,” the analysts wrote.
One popular way of investing in bitcoin is through spot bitcoin ETFs, or exchange-traded funds, which allow investors to have a stake in bitcoin without directly owning the cryptocurrency. According to data from Morningstar Direct, investors pulled USD 3.6 billion out of spot bitcoin ETFs in November, the largest monthly outflow since the ETFs began trading in January 2024.